Income Tax Appellate Tribunal - Ahmedabad
Jivraj Tea Limited, Surat vs Assessee on 18 August, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "A", AHMEDABAD
Before Shri Bhavnesh Saini, JM & Shri A.N. Pahuja, AM
I.T.A. No.3003/Ahd/2009
&
S.P. No.1/Ahd/2010
(Assessment year AY 2005-06)
Jivraj Tea & Industries Ltd vs Dy.CIT, Central Circle-2
3rd Floor, Dr Mansukhlal Tower Room No.504, Aayakar
Opp Dhiraj Sons, Athwalines Bhavan, Majura Gate, Surat
Surat 395 001
[PAN : AAACJ5957E]
(Appellant / Applicant) (Respondent)
I.T.A. No.3004/Ahd/2009 - AY 2005-06
I.T.A. No.3005/Ahd/2009 - AY 2006-07
&
S.P. No. 2/Ahd/2010
(In I.T.A. No 3005/Ahd/2009)
(Assessment year 2006-07)
Jivraj Tea Company vs Dy.CIT, Central Circle-2
5/258-259, Jivraj Chambers Room No.504,
Ruwala Tekra Aayakar Bhavan
Baranpuri Bhagal, Surat Majura Gate, Surat
[PAN : AACFJ2236R]
(Appellant / Applicant) (Respondent)
I.T.A. No.3006/Ahd/2009 - AY 2005-06
I.T.A. No.3007/Ahd/2009 - AY 2006-07
&
S.P. No.3/Ahd/2010
(In ITA No.3007/Ahd/2009)
(Assessment year 2006-07)
Jivraj Tea Limited vs Dy.CIT, Central Circle-2
5/258-259, Jivraj Chambers Room No.504,
Ruwala Tekra Aayakar Bhavan
Baranpuri Bhagal, Surat Majura Gate, Surat
[PAN : AACFJ5895P]
(Appellant / Applicant) (Respondent)
2 I.T.A. No.3003 to 3007 & 3019/Ahd/2009
ITA No.3019/Ahd/2009
(Assessment year 2006-07)
The ACIT, Central Circle-2 vs M/s Jivraj Tea Ltd
Surat 5/258-259, Jivraj Chambers
Ruwala Tekra
Baranpuri Bhagal, Surat
(Appellant) (Respondent)
Assessee by : Shri JP Shah, AR.
Revenue by : Shri Rajeev Agarwal, DR
ORDER
AN Pahuja : The appeals in ITA nos 3003 ,3004& 3006/Ahd/2009 filed by aforesaid three different assessees against separate orders dated 18.8.2009 of the ld. CIT(A)-II, Ahmedabad for the AY 2005-06 raise certain common issues relating to deduction u/s 80IA(4) on the profits derived from electricity generation from the windmills while appeals in ITA nos 3005 & 3007/Ahd/2009 filed by aforesaid two assessees against separate orders dated 18.8.2009 of the ld. CIT(A)-II, Ahmedabad for the AY 2006-07, raise another set of common issues relating to disallowance u/s 40A(2)(a) of the Act. The appeal in ITA No.3019/Ahd/2009 is filed by the Revenue in the case of M/s Jivraj Tea Ltd for the AY 2006-07,raising grounds relating to disallowance of sales promotion expenses.. The three stay petitions filed by these assessees seek stay of demand raised in the respective assessment years. Since these appeals and stay petitions belong to the same group of assessees while issues are common, these were heard simultaneously for the sake of convenience and are being disposed of through this common order.
ITA No.3003/Ahd/2009 - Jivraj Tea & Industries Ltd ITA No.3004/Ahd/2009 - Jivraj Tea Company ITA No.3006/Ahd/2009 - Jivraj Tea Ltd 3 I.T.A. No.3003 to 3007 & 3019/Ahd/20092. In these three appeals, the assessees have raised grounds relating to their claim for deduction u/s 80IA(4) of the Income-tax Act, 1961 (hereinafter referred to as the 'Act').Facts, in brief, as per relevant orders in the case of M/s Jivraj Tea & Industries Ltd. are that return declaring income of Rs.10,43,150/- was filed on 9.9.2005 for the AY 2005-06. Inter alia, the assessee claimed deduction of Rs.97,41,412/- u/s 80IA(4) of the Act . During the course of assessment proceedings, the Assessing Officer[AO in short] noticed that the assessee claimed deduction u/s 80IA(4) of the Act @ 100% of the profits derived from generation of electricity from Wind Mill situated in Ahmednagar, Maharashtra. On perusal of the Profit & Loss Account and balance-sheet of the Wind Mill Division, the AO noticed that:
i. The sales of electricity was shown at Rs.66,00,123/- in the profit and loss account whereas in the report in form 10CCB the same was reported at Rs.1,33,58,136/-.
ii. The net profit as per P & L Account was taken at Rs.50,78,889/- while in form 10CCB, the same was shown at Rs.79,72,790/-.
iii. The assessee credited Sales Tax Incentive of Rs. 67,50,000/-.
According to the AO, it was hard to believe that the sales-tax incentive would be more the sales.
2.1. Accordingly, the AO inferred that:
i. the figure of sales and profit reflected in the P & L Account do not match with the figures of sales and profit appearing in form 10CCB and no clarification was given by the assessee in this regard;
ii. no clarification has been given by the assessee about the sales tax incentives claimed to have been received by it; iii. deduction claimed u/s 80IA(4) was wrong inasmuch as the figures in form 10CCB do not match with the P&L Account and therefore, is liable to be rejected;4 I.T.A. No.3003 to 3007 & 3019/Ahd/2009
iv. the assessee has not explained as to how the sales-tax incentives were more than that of the sales. The AO presumed that that the capital subsidy on account of sales tax incentives has wrongly been claimed as revenue receipt; and v. if the capital subsidy is taken off from the profit, there will be loss and no deduction will be allowable to the assessee.
2.2 In the light of aforesaid inferences, the AO denied deduction u/s 80IA(4) of the Act. Likewise, the claim for deduction u/s 80IA(4) of the Act in the case of other assesses M/s Jivraj Tea Company having windmill at Bhogat,Jamnagar and M/s Jivraj Tea Limited ,having windmill in Ahmednagar, was also disallowed.
3. On appeal, these assessees contended that the assessment order had been passed in defiance of principles of natural justice since the AO denied their claim without giving notice of his proposed action .However, the ld.CIT(A) rejected this contention, the assessment order having been passed after issuing notices u/s 143(2) /142(1) of the Act and providing proper hearing. As regards merit of their claim, the assessee contended that apart from sales shown in the profit and loss account , the assessee earned income from sale of their entitlement for sales tax exemption to M/s Mahindra & Mahindra Ltd.. Thus, there was no discrepancy in the figure shown in form 10CCB. In the light of these submissions, the ld. CIT(A) held in the case of Jivraj Tea & Industries Ltd. in the following terms :
"3.3 I have considered the facts and the submissions. I find that deduction claimed u/s 80IA cannot be disallowed for the reasons mentioned by the Assessing Officer. However, the deduction u/s 80IA is not allowable to the appellant for the following reasons:
(a) I find that the wind mill costing Rs.5 crores was installed on 29.03.2002. The total income earned from this wind mill in earlier years (as per details submitted by the appellant), is as under:5 I.T.A. No.3003 to 3007 & 3019/Ahd/2009
AY Gross Expenses Net Income
Income (excluding (Before
from the Depreciation) depreciation
Windmill (Rs.)
(Rs.)
2002-03 962 33,031 -32,069
2003-04 1,40,60,480 21,33,867 1,19,26,613
2004-05 1,34,80,655 47,12,888 87,67,767
2005-06 1,33,50,123 28,08,711 1,05,41,412
Thus, the total income earned from the date of installation to the close of the previous year comes to Rs.3,12,03,723/-, whereas the depreciation claimed on his windmill from the initial year to this year comes to Rs.5 crores. As per section 80IA(5), for the purpose of determining the quantum of 'tax holiday' profits u/s 80IA, the taxable income of the eligible business of the industrial undertaking etc., is to be ascertained as if such undertaking were an independent unit owned by the assessee concerned and the assessee had no other source of income. If we consider the unabsorbed depreciation from earlier years on his windmill, there remains no income for this year from windmill.
Hence, the appellant is not entitled for deduction u/s 80IA of the Act.
(b) The Hon'ble ITAT, Mumbai Bench held in the case of Addl. CIT vs. Ashok Alco Chem. 96 ITD 160 as under:
"It is seen that only for the purposes of determining the quantum of deduction u/s 80IA, a legal fiction has been created by sub- section (5) by virtue of which, the profit or gains of eligible business of an industrial undertaking shall be computed as if the eligible business were the only business of the assessee company right from the date of its establishment. Thus, the unabsorbed depreciation and unabsorbed losses of the eligible business are to be carried forward and set off against the income of eligible business of current year. The deeming fiction calls for this carry forward and set off irrespective of the fact that the unabsorbed depreciation and unabsorbed losses of the eligible business had already been set off against the income of other eligible or non eligible business in the year in which they were incurred or in any subsequent year."
(c) In the case of ACIT Circle 4 vs. Goldmine Shares & Finance Pvt. Ltd. 113 ITD 209 (Ahd) (SB), the Special Bench of Hon'ble ITAT held as under:
6 I.T.A. No.3003 to 3007 & 3019/Ahd/2009"In view of the specific provisions of section 80IA(5) of the I.T. Act, 1061, the profit from the eligible business for the purpose of determination of the quantum of deduction under section 80IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years."
(d) The income from sale of entitlement of sales tax exemption is not derived from the eligible business but only incidental to the business hence, deduction u/s 80IA is not allowable on this income.
(e) Even if the deduction cannot be disallowed by considering the reason given by the AO, it can be disallowed by considering other relevant reasons, because the CIT(A) has the same power as of the AO while deciding the appeal on a particular issue. Hence, the issue of appeal is allowability u/s 80IA and for this, sub section 80IA(5) has to be considered even if the same was not discussed by the AO.
3.4 In view of these facts of the case and the case laws discussed above, it is held that the appellant is not entitled for the deduction u/s 80IA of the Act. Hence, this ground is rejected."
3.1 Similar findings were recorded in the case of two other assessees.
4. These assessees are now in appeal before us against the aforesaid findings of the ld. CIT(A). The ld. AR on behalf of these assessees while inviting our attention to para 3.3 of the impugned orders and ground nos. 1 & 2 of the appeal, submitted that the ld. CIT(A) was not justified in rejecting their claim for deduction claimed u/s 80IA of the Act on a ground totally different from the ground on which the impugned deduction was denied by the AO, without issuing any show cause notice so as to afford the assessee an opportunity of being heard and represented in relation to the new ground for rejection. The ld. AR while inviting our attention to their written submissions contended that the disallowance has been upheld in violation of principles of natural justice without allowing sufficient opportunity to the assessees. On the other hand, the ld. DR, without disputing these submissions on behalf these assessees, supported the orders of the lower authorities.
7 I.T.A. No.3003 to 3007 & 3019/Ahd/20095. We have heard both the parties and gone through the facts of the case. Undisputedly and as contended by the ld. AR on behalf of these assessees, the ld. CIT(A) upheld the disallowance on an altogether different ground, without allowing sufficient opportunity to the assessees to explain their case in the light of relevant provisions of sec. 80IA of the Act . We are of the opinion that the ld. CIT(A) should have passed the order only after these assessees had been given a reasonable opportunity of setting out their case. A mere ritual or empty formality will not be an opportunity as contemplated by law. It will be a "pretence" or "make believe". This is not a case of a mere routine or simple matter. In this connection, Hon'ble justice Krishna Iyer J., as he then was, stated in A. Ibrahim Kunju's case, AIR 1970 Ker 65 at page 67:
". . . . opportunity should be real and not ritualistic, effective and not illusory and must be followed by a fair consideration of the explanation offered and the materials available, culminating in an order which discloses reasons for the decision sufficient to show that the mind of the authority has been applied relevantly and rationally and without reliance on facts not furnished to the affected party.
Natural justice, I must warn, cannot be perverted into anything unnatural or unjust and cannot therefore be treated as a set of dogmatic prescriptions applicable without reference to the circumstances of the case. The question merely is, in all conscience have you been fair in dealing with that man ? If you have been arbitrary, absent-minded, unreasonable or unspeaking, you cannot deny that there has been no administrative fair play. "
5.1. We notice that over the years by a process of judicial interpretation two rules have been evolved as representing the principles of natural justice in judicial process, including therein quasi judicial and administrative process. They constitute the basic elements of fair hearing, having their roots in the innate sense of man for fairplay and justice which is not the preserve of any particular race or country but is shared in common by all men. The first rule is nemo judex in causa sua' or nemo debet esse judex in propria causa sua' as stated in [1605] 12 Co. Rep. 114, that is, "no man shall be a judge in his own cause". The second rule and that is the rule with which we are concerned in this case is "audi alteram partem", that is, "hear the other side". At times and 8 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 particularly in continental countries, the form "audietur at altera pars" is used, meaning very much the same thing. A corollary has been deduced from the above two rules and particularly the audi alteram partem rule, namely, "qui aliquid statuerit parte inaudita altera, aequam licet, dexerit, haud aequum facerit", that is, "he who shall decide anything without the other side having been heard, although he may have said what is right, will not have been what is right" or in other words, as it is now expressed, "justice should not only be done but should manifestly be seen to be done".
6. In view of the foregoing, especially when these assessees seek sufficient opportunity of hearing before disposal of their appeals by the ld. CIT(A) while the ld. DR did not oppose the submissions on behalf of the assessee, in the interest of substantial justice & fair play, the impugned orders are set aside and these appeals are remitted back for fresh disposal after giving sufficient opportunity of hearing to the assessees. The ld. CIT(A) may, thereafter, pass such order as he deems proper, in accordance with law.
ITA No. 3005/Ahd/2009 by Jivraj Tea Company, Surat and ITA No. 3007/Ahd/2009 by Jivraj Tea Ltd., Surat----------------------------------------------------------------------------------
7. In ground nos. 1 to 3 of these two appeals , the assessees have raised the issue relating to disallowance u/s 40A(2)(a) of the Act. During the course of assessment proceedings in the case of Jivraj Tea Company, the AO noticed that , the assessee, engaged in the trading business of tea, had made purchases of tea from several outside parties as well as from sister concerns, falling within the ambit of s.40A(2)(b) of the Act, namely, M/s. Jivraj Tea Ltd., Jivraj Tea & Industries Limited, and M/s. Surin Corporation. The purchases of tea from the related concerns, were made at higher rates than the rate of tea purchased from non related concerns. The assessee made purchases at an average price of Rs.103.13/- per kg. from 9 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 outside parties and @ Rs.119.23 per kg., and Rs.148.64/- per kg. from related parties, namely M/s. Surin Corporation and Jivraj Tea Ltd.. Accordingly, the AO requested the assessee to justify the rates of purchase of tea from sister concerns vis-à-vis purchases from other parties. The assessee replied that the quality of the tea purchased from sister concerns and those from other parties being different, the question of justification of comparable rates does not arise. The AO, however, held that such an assertion being merely an unsubstantiated claim, was not acceptable and accordingly, treated the portion of purchase price paid to related parties over and above the average price of Rs. 103.13/- per kg. of tea as excessive and unreasonable and devoid of commercial expediency on the ground that:
"a. the conditions of purchase like payment schedules, credit facilities etc. are similar between outside parties as well as related concerns. Hence, no other special benefit has been derived by the Party from transaction with related concerns.
b. The assertion that the quality of tea purchased from outside parties are different from those purchased from related concerns have been found to be unacceptable.
c. There are no specific quality parameters mentioned on the purchase bills and the quality parameters mentioned are not standard and are not ascertainable nor verifiable fro m extant literature on tea quality. Hence, the quality differentia is not accepted as a valid argument on the facts of the case.
d. Further, from the perusal of purchase bills, it has been found that the only possible differences which appear are as regards to source 'garden' and 'grade' (Dust/Leaf- Pekoe(OP/BP/BOP) etc). However, the prices variations in respect of source 'garden' as well as 'grade' are not consistent or apparent. Therefore, the quality in terms of 'garden' or 'grade' can not be accepted as a differentiating factor on the facts of the case. The arguments of the 10 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 assessee in respect of rate difference due to 'quality' is not tenable.
e. The final sale of product (tea) has been made by the assessee in form of standardized packets like Jivraj Tea, J9 Tea, J9 Green Tea, Anokhi Tea, La Jawab Tea, Suryakiran Tea, etc., without any 'garden-wise' quality specification. Hence, it can not be inferred or accepted that the so-called 'garden-wise' quality difference is material to the business of the assessee. It is clear that the 'garden-wise' quality differentiation is only a plea to claim higher and greater purchase price in respect of purchase from related concerns.
f. The purchase bills of related concerns have been perused and analysed. It has been found that the related selling party has also made purchases from certain common agencies as those from which the assessee has purchased tea. Hence, it is clear that similar tea has been procured from one and the same source as above, by both the assessee as well as the supplier related concerns, viz. Jivraj Tea Limited and M/s. Surin Corporation. But the price charged by the related concern for the same tea is higher. Hence, clearly an artificial entity in form of the sister trading concern has been created and introduced to hike up the price of tea used as inputs.
g. From the perusal and analysis of the books of accounts and sale register of the related sister concern M/s. Surin Corporation, it has been found that the concern has made sales only to the assessee and other sister concerns and has no third-party sales. Hence, from the facts it is clear that the specified sister concern M/s. Surin Corporation does not have any role or rationale than to artificially enhance the input price and transfer the same input to sister concerns.
7.1 In view of the aforesaid reasons, the AO concluded that there was no commercial expediency in making payments to related parties in excess of market rates and that the payment made @ Rs. 103.13/- to outside third parties was the actual market rate of tea, which was f air and reasonable. Any expenditure made by the assessee over and above such unit rate 11 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 to the specified concerns was bereft of commercial expedienc y and reasonability and hence gets hit by the provisions of sec. 40A(2)(a) of the Act.Accordingly, the AO worked out the excessive payments made to sister concerns and made disallowance of Rs.1,18,98,049/- u/s. 40A(2)(a) of the Act on account of excessive and unreasonable payments to related parties as under:-
S r. Name of Qt y. Unit Fa i r & E x c e s s i ve E x c e s s i ve No. specified Rate Reasonable Unit To t a l c o n c e rn Rate Payment Payment 1 M / s S u ri n 6888102 119.23 103.13 16.10 11079796 C o rp o ra t i on 2 J i vr a j 17980 148.64 103.13 45.51 818254 Te a L i mi t e d To t a l s 11898049 7.2 Like wise in the case of Jivraj Tea Limited, the AO worked out disallowance of Rs. 6,31,08,777 in the following manner:
S r. Name of Qt y. Unit Fa i r & E x c e s s i ve E x c e s s i ve No. specified Rate Reasonable Unit To t a l c o n c e rn Rate Payment Payment 1 J i vr a j Te a 10774 111.7 97.60 14.1 152330 C o (H O ) 2 J i vr a j Te a 580727.3 126.2 97.60 28.6 16630078 & I n d u s t ri e s L i mi t e d 3 M / s S u ri n 11061 106.4 97.60 8.8 97799 C o rp o ra t i o n 4 M / s S u ri n 2107932.9 119.5 97.60 21.9 46228570 C o rp o ra t i o n To t a l s 63108777
8 On appeal, the assessee while relying upon the decisions in the case of CIT vs. Indo Saudi Services(Travel) P Ltd.,219 CTR(Bom.) 562,DCIT vs. Microtex Separators Ltd.,293 ITR 12 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 451(Kar),ACIT vs. Ram & Co(Interiors) Pvt. Ltd.,1 SOT 145(Mumbai) & DCIT vs. Lab India Instruments Pvt. Ltd.,93 ITD 120 contended that related concerns having been assessed at the maximum rates, the findings of the AO that the assessee paid excessive purchase price for tea from the related concerns was with a view to avoid tax, is incorrect. In the absence of any motive for evasion of tax, the provisions of sec. 40A(2)(a) were not applicable. Since rate of purchase of tea depends upon numerous factors like source garden, grade of tea, time of purchase and rate bid by other bidders etc.,the purchase rates differ substantially at a different times in respect of purchases from the same party having same grade and garden. Therefore, the comparison with the average rates of purchases from outside parties was not proper. In this connection, the assessee relied upon decisions in the case of Marghabhai Kishabhai Patel & Co. vs. CIT,108 ITr 54(Guj),ITO vs. Jai Sati Syntex (P) Ltd.,121 TTJ 376(Ahd.),Sanchita Marine Products (P) Ltd. Vs. DCIT,15 SOT 280(Mumbai) & Pondy Metal & Rolling Mills Pvt. Ltd. Vs. DCIT,107 TTJ(Del)336.Since the assessee also made purchases @ Rs. 132 and Rs.140/- per kg also from outside parties and even at lower sale rates from related parties, comparison at average rates was not correct, the assessee argued. Since GP rate of 13.92 % has been accepted by the AO, no further addition was possible in view of decision in Upvan International Vs. ITO,15TTJ(Del.) 215. Since all the bills contain source garden and grade of tea in respect of purchases from outside parties while transportation cost is separately debited as against no transportation cost in purchases from sister concerns , apparently comparison was not proper, especially when no such disallowance had been made in the earlier years. After considering these submissions , the ld. CIT(A) upheld the 13 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 disallowance in the following terms in the case of Jivraj Tea Company:-
"2.4 I have considered the facts and the submissions. I do not agree with the appellant's view for the following reasons:
a) The appellant has maintained that indeed the quality of tea purchased from outside parties are different from those purchased from related concerns and therefore, the prices and rates are not comparable. Whereas the Assessing Officer held that the assertion of the appellant that the quality of tea purchased from outside parties are different from those purchased from related concerns are unacceptable. Thus, the basic issue in appeal is the existence or otherwise of verifiable and ascertainable quality differences in the purchases of tea made by the assessee as evident from the purchase bills, vouchers etc. received, maintained and produced by the assessee.
From the perusal of purchase bills, it has been found that the only possible differences which appear are as regards to source garden or estate and grade (Dust or Leaf -Pekoe or Orange OP or Broken Pekoe, or Broken Orange Pekoe etc. etc). As per common knowledge tea grades are numerous numbering in excess of fifty and are not at all standardized, and may vary widely according to country or region of origin. Since numerous 'grades' of tea exist, a particular 'grade' itself may not unambiguously indicate 'quality'. On the same line of notion, it has been inferred by the Assessing Officer, on the facts of the case, that the price variations in respect of source 'garden' as well as 'grade' are not consistent or apparent. The appellant has not been able to successfully negate and counter this argument of the Assessing Officer with evidences. Therefore, I am inclined to agree with the Assessing Officer that quality in terms of source garden names or, non- standard grades can not be accepted as verifiable and differentiating quality parameter on the facts of the case.
b) Now whether the differences which appear on the bills and vouchers of purchase are merely as regards to source 'garden or tea estate' and 'grade1 and not 'quality' per se. It is common knowledge that all sorts of qualities of tea are grown in a tea estate and the mere mention of name of the 14 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 garden does not cast any impression on the 'quality1 of the tea. From the perusal of the bills, the prices for different grades are same even in case of consignment taken from the same garden, which renders the 'grade' an inconsistent indicator of 'quality' and 'price', as prices are not linked to grade of the tea. Further, all sorts of qualities of tea are grown in an estate and the mere name of the garden does not alter the quality of the tea. Hence, clearly mere specification of source garden is not a definite quality indication and therefore, the quality in terms of 'garden1 or 'grade1 can not be accepted as a differentiating factor on the facts of the case. On facts of the case, the basic parameters of quality per se are not available on the bills, purchase vouchers etc. maintained and shown by the appellant. In summary, the arguments of the appellant in respect of rate difference due to difference in quality is neither verifiable nor tenable.
c) It has been pointed out by the Assessing Officer that the final sale of tea has been made by the appellant in form of standardised packets in the name and style of Anokhi Tea, J9 Tea, Jivraj Tea, La Jawab Tea, Suryakiran Tea etc. without any 'garden-wise' or 'grade-wise' quality specification. Based upon this fact, it has been argued by the Assessing Officer that it can not be inferred or accepted that the 'garden-wise' or 'grade-wise' quality difference is material to the business of the appellant. Further, the Assessing Officer argued that the 'garden-wise1 quality differentiation is only a plea to claim higher and greater purchase price in respect of purchases made from related concerns. I am inclined to agree with the Assessing Officer's view that the purchase vouchers do not contain sufficient details indicating the quality of tea purchased.
d) The Assessing Officer has contended from the perusal and analysis of purchase bitts of related concerns that the seller related party has also made purchases from certain common agencies as those from which the appellant has purchased tea. Hence, it has been inferred by the Assessing Officer that similar tea has been procured from one and the same source, by both the appellant as well as the seller/supplier related concerns, viz. Jivraj Tea Limited and M/s. Surin Corporation. Further, it has been inferred that the price paid to the related concern for the same tea has been comparatively higher than the price paid to outside parties. The appellant has also not been able to 15 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 rebut this argument and therefore, I tend to agree with the Assessing Officer that payments for similar inputs (tea) have been made to related parties by making higher payments than those compared to outside parties selling at fair market value.
e) The Assessing Officer has pointed out that from the perusal and analysis of the books of accounts and sale register of the related sister concern M/s. Surin Corporation, it has been found that the concern has made sales only to the appellant and other sister concerns and has only nominal third-party sales.
f) The appellant has submitted that the Assessing Officer has adopted price 'averages' as the basis for disallowance and such an action is not permissible. For this, the assessee has relied on the case law of the jurisdictional High Court (Marghabhai Kishabhai Patel & Co. Vs. C.I.T. 108 ITR 54 (Guj.). The assessee's this submissions is not acceptable because in the case of Marghabhai Kishabhai Patel & Co. Vs. C.I.T., it was observed by the Court that ITO could not ignore the quality difference and fluctuations in price from time to time to arrive at average price. Thus, in that case, the quality of the item under consideration was clear and ascertainable from the bills of purchase. While in the instant case, the quality of the product, which is tea, is not reflected at all numerous bills of purchase. Even certain vouchers are blank bills of sale made by the sister concern showing only the invoice amounts and not the basic details, let alone quality. Further, in the relied case, the prevailing market price of the product in question was furnished by the appellant. But, in the instant case the appellant failed establish the prevailing fair market value of the item in question, tea. In the relied case, the sister concern of the appellant made significant sales to other parties also. But in the case at hand, the specified concern Surin Corporation has made insignificant and very little sales to outside parties. Further, that case refers to the assessment year 1962-63 to 1965-66 when no specific provision of section 40A(2)(a) was there in the Statute which was introduced by the Finance Act, 1968 w.e.f. 01.04.1968.
The ratio of the case laws relied on by the appellant of ITO vs Jai Sati Syntex Pvt. Ltd. 121 TTJ 376, is not applicable to appellant's case. In that case, it was held that no disallowance u/s.40A(2)(a) can be made by comparing the 16 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 purchase price of goods with rates at which goods valued at year end. Here it is not the case.
The ratio of the case laws relied on by the appellant in the case of Sanchita Marine Products Pvt.Ltd. vs DCIT 15 SOT 280, is not applicable to the appellant's case. In that case, it was held that there being no mention in the assessment order that the grade of fish supplied by all the vendors and sister concern was the same, addition was not justified. Here in this case, the A.O. has held that quality was not mentioned in the purchase voucher hence, quality was same, supplied by related and non related persons.
The ratio of the case laws relied on by the appellant in the case of Pondy Metal & Roiling Mills Pvt.Ltd. vs DCIT 107 TTJ 336, is not applicable to the appellant's case. In that case, it was held that revenue has not compared the price of raw material paid by the assessee with the prices charged for the same material by other suppliers in the open market and the fact of bulk purchases has not been properly appreciated. Here it is not the case. The A.O. has compared the price for the same type of material and quantity of purchases is also comparable.
In view of the fact that the difference in quality as claimed by the appellant is nebulous and non-emergent from the bills of purchase, and given the fact that majority of the sale of the specified sister concern has been made to appellant group only, the use of "weighted average1 (With quantities working as the weights) price of the product will give a fair and rational view,
g) The appellant has submitted that at some occasions, the appellant purchased the tea from outside parties at heavy rates and purchased tea from related concerns at low rate also. But this fact cannot justify the purchase from related concerns at excessive rates for most of the time.
h) The appellant has submitted that the appellant's disclosed G.P. rate is 13.92% and after addition it becomes 20.48% and net profit rate becomes 12.35% from 5.78. For small businessman/retailers, the presumptive net profit rate is at 8% but in the appellant's case, net profit becomes 12.35% which is not possible hence, addition is not justified. In this regard, I find that the appellant is not a mere retailer justifying 8% net profit rate. The appellant 17 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 purchases tea from auction houses and after packaging, and selling under brand name, no fixed rate can be prescribed. When the Assessing Officer has made specific disallowance u/s.40A(2)(b) and the N.P. rate comes to 12.35% this may be justifiable.
In view of these facts, it is held that the action of the. Assessing Officer is justified and the addition is confirmed. Accordingly, this ground of appeal is rejected."
8.1 Like wise in the case of Jivraj Tea Limited, the ld. CIT(A) upheld the disallowance of Rs. 6,31,08,777/-.
9. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(A). The ld. AR on behalf of the assessee while reiterating their submissions before the ld. CIT(A) and relying upon the decision of a co-ordinate Bench in the case of Jivraj tea Company Vs. JCIT in ITA no. 1859 & 630/Ahd./2003 as also decision in CIT vs. Indo Saudi Services(Travel) P Ltd.,219 CTR(Bom.) 562 contended that the ld. CIT(A) was not justified in upholding the disallowance .On the other hand, the ld. DR supported the findings of the ld. CIT(A).
10 W e have heard both the parties and gone through the facts of the case as also the decisions relied upon. The relevant provisions of sec. 40A(2) of the Act stipulate that where an assessee incurs any expenditure in respect of which payment has been or is to be made to any person referred to in clause (b) of the said sub-section, and the Assessing Officer is of the opinion that such expenditure is unreasonable or excessive having regard to the fair market value of the goods, services and the facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. The scope of 18 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 the section has been explained in the circular of CBDT No. 6P(LXXXVI-66) of 1968, dated 6th July, 1968 wherein in paras 72 and 74, it was stated thus:
"Para 72 : The Finance Act, 1968, has introduced a new s. 4OA in the IT Act w.e.f. 1st April, 1968. Under sub-s. (2) of new s. 4OA, expenditure incurred in a business or profession for which payment has been or is to be made to the taxpayer's relatives or associate concerns is liable to be disallowed in computing the profits of the business or profession to the extent the expenditure is considered to be excessive or unreasonable. The reasonableness of any expenditure is to be judged having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession or the benefit derived by, or accruing to, the taxpayer from the expenditure. Such portion of the expenditure, which, in the opinion of the ITO, is excessive or unreasonable according to these criteria is to be disallowed in computing the profits of the business or profession.
Para 74: It may be noted that the new provision is applicable to all categories of expenditure incurred in businesses and professions, including expenditure on purchase of raw materials, stores or goods, salaries to employees and also other expenditure on professional services, or by way of brokerage, commission, interest, etc. Where payment for any expenditure is found to have been made to a relative or an associate concern falling within the specified categories, it will be necessary for the ITO to scrutinize the reasonableness of the expenditure with reference to the criteria mentioned in the section. The ITO is expected to exercise his judgment in a reasonable and fair manner. It should be borne in mind that the provision is meant to check evasion of tax through excessive or unreasonable payments to relatives and associate concerns and should not be applied in a manner which will cause hardship in bona fide cases."
10.1 In the instant case, we find that the AO analysed the average tea prices on purchase of tea from outside parties vis-a-vis purchase price from the sister concerns like Jivraj Tea Industries Ltd. & Surin Corporation and concluded that the assessee paid excessive purchase price to sister concerns. The yard stick adopted by the AO is average purchase price of tea from the other parties. Now the tea has large varieties and its price depends upon a number of factors depending upon its quality;quality will be better in ideal conditions of humidity and height of the garden and tea plucked from fresh bushes as 19 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 against tea grown at lower altitudes and plucked from old bushes. The tea from a garden at higher altitudes will fetch higher price as compared to tea grown in gardens at lower altitudes. Fresh tea normally fetches higher prices as compared to old stock. Tea is generally sold in auction by various gardens and the market rates of a particular quality depends upon the best bidding. The price of dust is lower as compared to the price of leaf tea. In view of variety of factors affecting tea trade, there can be no standard for fixing the price of tea. The AO has compared average price of tea purchased from outside parties vis-à-vis purchase from sister concerns. No attempt has been made to ascertain the price prevailing in the market on the day when purchases are stated to have been made from the sister concerns, especially when the price prevailing on a particular day fluctuates even in respect of tea from the same garden and of the same grade. No finding has been recorded by the ld. CIT(A) on the plea on behalf of the assessee that purchases of tea from sister concerns have also been made at lower rates vis-à-vis purchases from outside parties. Hon'ble jurisdictional High Court in the case of Marghabhai Kishabhai Patel & Co. Vs. CIT,108 ITR 54(Guj) held that the average price of earlier purchases cannot be taken as the basis of determining cost of subsequent purchases. Besides, the AO/the ld. CIT(A) have not analysed the impact of transportation cost on purchase of tea from outside parties and have altogether ignored the plea on behalf of the assessees that heavy transportation cost was incurred on purchase of tea from the outside parties. The provisions of section 40A(2)(a) cannot have any application, unless it is first concluded that the expenditure was excessive or unreasonable, as held in the case of Upper India Steel Manufacturing And Engineering Co. Private Limited. vs Commissioner Of Income-Tax, Lucknow, 117 ITR 569(SC). In the case under consideration, there is nothing to suggest 20 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 that the AO ever brought any material on record on this aspect nor even cited any comparable instances in respect of the fair market value of the tea purchased from a particular garden and of a specific grade on the date when purchases were made from sister concerns for which the payment has been made, before concluding that expenditure was excessive or unreasonable, especially when in the preceding years no such disallowance has even been attempted. It is the settled legal position that comparison has to be made among equals. The onus is on the Assessing Officer to establish that payments made by assessee were excessive or unreasonable. No other material has been brought to our notice by the Revenue to establish the excessive-ness of the payments.
10.2 Moreover, it is not the quantum alone that governs in such cases. Fair market value of the goods, services, legitimate needs of the business or profession of the assessee, would be the guiding factor in terms of section 40A(2) of the Act. In the case on hand, the assessee is purchasing from outside parties and sister concerns in the preceding assessment years also. As already observed, price of tea depends upon a number of factors even in respect tea from the same source garden and same grade depending upon the bid price during the course of day. There is no material on record as to what were the prices prevailing on a particular day when tea of a particular variety and quality was purchased from sister concern nor any attempt seems to have been made to compare the price paid to sister conscens with those prices. As pointed out in the case of Indo Saudi Travel Services(P) Ltd.(supra), CBDT Circular No. 6-P, dt. 6th July, 1968 stipulated that no disallowance can be made under s. 40A(2) of the Act in respect of the payments made to the relatives and sister concerns where there is no attempt to evade tax. The assessees before us are stated to be paying tax at the maximum prevailing rates and there is no evidence on record nor there is any allegation regarding evasion of tax by any of these assessees . The ld. DR did not point out as to how the assessee evaded payment of tax by alleged 21 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 payment of higher purchase price to its sister concern since the sister concerns were also paying tax at higher rates , as admitted before us by the ld. AR.
10.3 Moreover, it is nobody's case that the transactions of purchase from the sister concerns were not bona fide transactions nor is it the case of the Revenue that these were sham transactions or that the price paid in respect of each of these transactions by the assessee was other than the one set out in the books of account of the assessee. Under these circumstances it appears to us that the taxing authorities had no right to substitute the average price in place of the price or value agreed to between the parties to the transaction, since the transaction has not been shown to be a sham one nor has it been shown that the value was not the value in the books of account.
10.4 In view of the foregoing, we are not inclined to agree with the reasons of the ld. CIT(A) and therefore, delete the disallowance made by the AO. Accordingly, ground nos. 1 to 3 in these two appeals are allowed.
ITA No. 3019/Ahd/2009[ Revenue] in the case of Jivraj Tea Ltd.,Surat
11. In this appeal, the Revenue have raised ground nos. 1 to 4 relating to disallowance of Rs. 1,04,65,420/- on account of sales promotion expenses. The AO noticed that there was increase of 351.54% in sales promotion expenses vis-à-vis increase of only 15.54% in turnover while net profit declined to 4.2% as against 4.56% in the preceding assessment year. The AO extracted the relevant details as under:
SELLING & D I S T R I B U TI ON E XP E N S E S Particulars 2005-06 (In 2006-07 (In %age Rise Rs.) Rs.) 22 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 Sales 494372214 571198752 15.54 Advertisement 5901895 14259203 141.60 Expenses Discounts & Incentive 0 3025280 Excessive Expenses Sales Promotion 7349104 8030024 9.27 Expenses Total of Impugned 13250999 59833379 351.54 Expenses Total (As %age of 2.68 10.48 Sales) 11.1 To a query by the AO, the assessee explained that there was no direct or mathematical relationship between turnover and sales promotion expenses. Since all the expenses had been incurred through account payee cheques while stiff competition forced the assessee to undertake sales promotion expenses, no disallowance could be made. However, the AO did not agree with the reply of the assessee on the ground that the assessee failed to furnish any cogent and verifiable explanation for the excessive and unreasonable increase in sales promotion expenses nor the assessee established the business nexus and necessity of the expenditure. The AO further observed that mere payment through account payee cheques itself would not entitle the assessee to deduction of the said expenditure unless the same was proved to be paid for commercial considerations and that it was for the assessee to establish by evidence that a particular allowance was justified. In this connection, the AO relied upon decision in[ Nemi Chand Kothari v. CIT [2003] 264 ITR 254 (Gau)]. Relying upon the decisions of the Apex Court in CIT v. Calcutta Agency Ltd. (1951) 19 IT R 191, CIT v. Imperial Chemical Industries 23 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 (India) (P.) Ltd. (1969) 74 ITR 17 and CIT v. C. Parakh and Co.
(India) Ltd. (1956) 29 ITR 661, the AO further observed that the burden of proving that a particular expenditure has been laid out or expended wholly and exclusively for the purposes of business was on the assessee. In the case of CIT vs. Chandravilas Hotel (1987) 164 ITR 102 (Guj), it has been held that if the expenditure is doubted by the assessing authority, it is the duty of the assessee to prove by leading evidence that the expenditure was in fact, incurred. No such burden having been discharged by the assessee in the instant case nor the assessee established the existence of any business connection of any payment made to claimed advertising parties, the AO disallowed the claim. As regards the payments of Rs.30,25,280/- made under nomenclature of 'Discounts & Incentive Expenses', the AO disallowed payments on the ground that these were merely of the nature of transfers and not business expenditure and the assessee in the instant case failed to establish the business nexus. Inter alia, since net profit of the assessee declined from 4.56% during the preceding year A.Y. 2005-06 to 4.2% in the year under consideration and the assessee failed to explain the fall in NP , the AO on the basis of claim of similar expenditure in the AY 2005-06, worked out the disallowance of Rs. 1,04,65,420/- as under:
Disallowance from claimed S&D Expenses Particular 2005-06 2006-07 2006-07 2006-07 (In Rs.) (In Rs.) (In Rs.) (In Rs.) Allowable Claimed Allowable Disallowance %age to Expenditures Expenditure Sales Sales 571198752 Advertisement 1.19 % 14259203 6819063 7440140 Expenses 24 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 Discounts & 0.00 % 3025280 0 3025280 Incentives Expenses Sales 1.49 % 8030024 8491171 -
Promotion Expenses Totals 25314507 10465420 12. On appeal, the assessee contended that there was
increase in expenditure of sales promotion expenses by 91% as was evident from the following details and not 351.54% as stated by the AO:
Particulars Assessment Year Assessment Year 2006-07 2005-06 (Rs.) (Rs.) Advertisement 1,42,59,203 59,01,895 expenses Discounts & 30,25,280 0 incentives expenses Sales Promotion 80,30,024 73,49,104 expenses Total 2,53,14,507 1,32,50,999 Relying upon the decisions in the case of CIT vs. M K Brothers 163 ITR 249 (Guj),CIT vs. Dhanrajgiri Raja Narsinhgiri (1973) 91 ITR 544 (SC),Voltamp Transformers Pvt. Ltd. vs CIT (1981) 129 ITR 105 (Guj),CIT vs. Computer Graphics Ltd. (2006) 285 ITR 84 (Mad) andJ S R Enterprises vs CIT (1994) 49 TTJ 363 (Del), the assessee contended that expenditure had been incurred wholly and exclusively for the purpose of business. In the light of these submissions, the ld. CIT(A) deleted the disallowance in the following terms:25 I.T.A. No.3003 to 3007 & 3019/Ahd/2009
"4. I have considered the facts and the submissions and the case laws relied on by the appellant. I agree with the appellant's view for the following reasons:
a) The total payment for the expenses have been made through account payee cheques/bank drafts. All the details and vouchers are maintained and verifiable.
b) None of the parties are related to the appellant company or its directors.,
c) With the increase in expenses, sales have also increased. The increase need not be in the same proportion.
d) As per decision of Hon'ble Supreme Court in the case of CIT V/s Dhanrajgiri Raja Narsinhgiri (1973) 91 ITR 544 (SC), it is held that -
"It is not open to the Department to prescribe what expenditure an assessee should incur and in what circumstances he should incur that expenditure. Every businessman knows his interest best."
Further, as per decision of Hon'ble Gujarat High Court in the case of Voltamp Transformers Private Limited V/s C1T (1981) 129 ITR 105 (Guj), it is held that -
"It is well settled law that so far as the question of commercial expediency and business needs of an organization are concerned, it is not the view point of the Revenue Officer which should count but it should be a view point of an ordinary businessman dealing with the situation like the one faced by the particular assessee in question. It is, therefore, from that particular view point that the question has to be approached."
Therefore, when the expenses are genuine and parties are not related concerns and not covered u/s.40A(2)(b), the 26 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 reasonableness and magnitude of the expenses, cannot be questioned and decided by the Assessing Officer.
e) The facts that there is sharp increase in expenses as compared to increase in sales from last year, may arose suspicion and may be the starting point of investigation and scrutiny by the Assessing Officer but it alone cannot be the basis for the disallowance. As per the decision of Hon'ble Gujarat High Court in the case of CIT V/s M. K. Brothers 163 ITR 249 (Guj), it was held that -
"wherein it is held that "when an item of expenditure payment is made through cheque / draft to the recipient and the Assessing Officer is unable to bring on record any evidence / material indicating of the fact that the amounts paid by cheque / draft came back to the assessee in the form of cash, the relevant expenditure cannot be disallowed."
In view of these facts and the case laws discussed above, the disallowances cannot be sustained. Accordingly, additions made are deleted and both the grounds are allowed. "
13. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A). The ld. DR while supporting the order of the AO contended that there is no finding by the ld. CIT(A) regarding services rendered by the recipients of the aforesaid amounts on account of advertisement and sales promotion expenses.On the other hand, the ld. AR on behalf of the asssessee while supporting the findings of the ld. CIT(A) relied upon a decision in the case of Sassoon J. David And Co. Pvt. Limited. vs Commissioner Of Income- Tax, Bombay,118 ITR 261(SC).
14. We have heard both the parties and gone through the facts of the case. Undisputedly, payments for the expenses have been made through account payee cheques/bank drafts and none of the parties is related to the assessee company or its directors. The ld. CIT(A) found that all the details and vouchers were maintained and expenses were verifiable. In nutshell, the 27 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 genuineness of the expenditure has not been doubted. Only ground for disallowance was that there was disproportionate increase in expenses vis-à- vis turnover of the assessee. As pointed out by the ld. CIT(A) while referring to the decisions in the case of CIT V/s Dhanrajgiri Raja Narsinhgiri (1973) 91 ITR 544 (SC) and Voltamp Transformers Private Limited V/s C1T (1981) 129 ITR 105 (Guj),, it is well settled that it is not open to the Revenue to prescribe what expenditure and in what circumstances an assessee should incur the expenditure. Every businessman knows his interest best. Considering the facts and circumstances of the case, especially when genuineness of the expenditure has not been doubted and there is no material before us so as to enable us to take a different view in the matter, we are not inclined to interfere with the findings of the ld. CIT(A). This view of ours is supported by the decision in the case of Sassoon J. David And Co. Pvt. Limited.(supra), where in Hon'ble Apex Court observed:
:It has to be observed here that the expression " wholly and exclusively "
used in s. 10(2)(xv) of the Act does not mean " necessarily ". Ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business. Such expenditure may be incurred voluntarily and without any necessity and if it is incurred for promoting the business and to earn profits, the assessee can claim deduction under s. 10(2)(xv) of the Act even though there was no compelling necessity to incur such expenditure. It is relevant to refer at this stage to the legislative history of s. 37 of the I.T. Act, 1961, which corresponds to s. 10(2)(xv) of the Act. An attempt was made in the I.T. Bill of 1961 to lay down the " necessity " of the expenditure as a condition for claiming deduction under s. 37. Section 37(1) in the Bill read "
any expenditure ...... laid out or expended wholly, necessarily and exclusively for the purposes of the business or profession shall be allowed ..........." The introduction of the word " necessarily " in the above section resulted in public protest. Consequently, when s. 37 was finally enacted into law, the word "
necessarily " came to be dropped. The fact that somebody other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under s.10(2)(xv) of the Act if it satisfies otherwise the tests laid down by law. This view is in accord with the following observations made by this court in CIT v. Chandulal Keshavlal & Co. [1960] 3 SCR 38 at page 48 ; 38 ITR 601, 610 (SC) :
" Another fact that emerges from these cases is that if the expense is incurred for fostering the business of another only or was made by way of 28 I.T.A. No.3003 to 3007 & 3019/Ahd/2009 distribution of profits or was wholly gratuitous or for some improper or oblique purpose outside the course of business then the expense is not deductible. In deciding whether a payment of money is a deductible expenditure one has to take into consideration questions of commercial expediency and the principles of ordinary commercial trading. If the payment of expenditure is incurred for the purpose of the trade of the assessee it does not matter that the payment may inure to the benefit of a third party (Usher's Wiltshire Brewery Ltd. v. Bruce [1914) 6 TC 399 (HL). Another test is whether the transaction is properly entered into as a part of the assessee's legitimate commercial undertaking in order to facilitate the carrying on of its business ; and it is immaterial that a third party also benefits thereby (Eastern Investment Ltd. v. CIT [1951] SCR 594 ; 20 ITR 1(SC). But in every case it is a question of fact whether the expenditure was expended wholly and exclusively for the purpose of trade or business of the assessee. "
14.1 In view of the foregoing , we do not find any merit in the ground nos. 1 to 4 in the appeal of the Revenue, expenditure having been incurred for promoting the business and to earn profits.
15. Ground no. 5 in ITA nos. 3003 & 3006/Ahd./2009, ground no. 6 in 3004/Ahd./2009, ground no. 4 in ITA nos. 3005 & 3007/Ahd./2009 and ground nos. 5 & 6 in ITA no.3019/Ahd./2009, being general in nature, do not require any separate adjudication while no additional ground having been raised in terms of residuary ground no. 6 in ITA nos. 3003,3004 & 3006/Ahd./2009 and ground no. 5 in ITA nos. 3005 & 3007/Ahd./2009 , all these grounds are dismissed.
16. In the result, appeals in ITA No.3003,3004 & 3006/Ahd/2009 are allowed for statistical purposes while appeals in ITA nos. 3005 & 3307/Ahd/2009 are partly allowed. The appeal of the Revenue in ITA no. 3019/Ahd./2009 is dismissed.
29 I.T.A. No.3003 to 3007 & 3019/Ahd/200917. Since appeals by these assessees have been disposed as indicated above, corresponding stay petitions do not survive and become infructuous.
Order pronounced on this 26th day of March, 2010.
Sd/- Sd/-
(Bhavnesh Saini) (A.N. Pahuja)
Judicial Member Accountant Member
Ahmedabad,
Dated: 26th March, 2010
Pk/-
Copy to:
1. The assessee
2. Dy.CIT, Central Circle-2,Surat
3. CIT(A)-II, Ahmedabad
4. CIT, Concerned
5. DR, "A" Bench
By order
Assistant Registrar, ITAT,
Ahmedabad